San Francisco State University
Department of Economics
Econ 312
/
Spring 2009
Professor: SangYeob Lee
Econ 312: Problem Set #4
Thursday, April 23
Question.1
Data were collected from a random sample of 220 home sales from a community in 2003.
Let
Price
denote the selling price (in $1000),
BDR
denote the number of bedrooms,
Bath
denote the
number of bathrooms,
Hsize
denote the size of the house (in square feet),
Lsize
denote the lot size (in
square feet),
Age
denote the age of the house (in years),
Poor
denote a binary variable that is equal to
1 if the condition of the house is reported as “poor.” An estimated regression yields
±
Price
=
119.2
+
0.485
BDR
+
23.4
Bath
+
0.156
Hsize
+
0.002
Lsize
+
0.090
Age

48.8
Poor
,
¯
R
2
=
0.72,
SER
=
41.5
(
23.9
)
(
2.61
)
(
8.94
)
(
0.011
)
(
0.00048
)
(
0.311
)
(
10.5
)
a
Suppose that a homeowner converts part of an existing family room in her house into a new bath
room. What is the expected increase in the value of the house?
Answer: $23,400 (recall that Price is measured in $1000s).
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 Spring '09
 aditya
 Economics, Englishlanguage films, square feet

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